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Last updated at: (Beijing Time) Thursday, April 04, 2002

Boston-based Consulting Firm to Expand in Chinese Mainland

The Boston Consulting Group (BCG), one of the world's top management consulting firms, will double their staff in China in the next three years. The perception of consulting in China has changed dramatically since 1995 and State-owned enterprises have been faced with issues of restructuring and now many understand very clearly the role of consulting.


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BCG to expand business in China

The Boston Consulting Group (BCG), one of the world's top management consulting firms, will double their staff in China in the next three years, said Carl Stern, president and chief executive officer.

BCG has seen "a very significant upsurge" in its China business in the past six months, Stern said recently in an exclusive interview.

"In the short run there is no question that China's growth will outstrip the West's," Stern added. ''The long-term is even more attractive."

BCG was the first foreign consulting firm to enter China 15 years ago and to have offices in Shanghai and Hong Kong. In November, it opened a new office in Beijing to help with its expansion.

Large network of clients

Currently about 50 per cent of the company's clients in China are multinational firms and the rest are domestic companies.

"For our clients in Japan and South Korea, the growth in the market made it imperative that they wanted to be there," said Stern.

Some big companies, like Toyota, are even mandating that their suppliers go to China, said Senior Vice-President and Managing Director of Greater China for BCG John Wong.

Domestic companies in telecommunications, banking, insurance, securities and automotive sectors are looking to improve their competitiveness as World Trade Organization membership brought down barriers.

"In the financial services sector, there is a lot of jockeying for position right now by the local banks, because they are not really competitive," said Wong.

Perception of consulting in China

He also noted that the perception of consulting in China has changed dramatically since 1995, the year he joined the firm.

State-owned enterprises have been faced with issues of restructuring and now many understand very clearly the role of consulting, he said.

Currently about 20 per cent of the inquiries raised by BCG's Chinese clients are about how to expand in the overseas market.

"We will see winners among Chinese companies," said Stern. "We expect some really interesting opportunities to emerge and some of them to go global and challenge the best of the West. BCG is known for helping its clients to obtain competitive advantage."

Both consumer products and pharmaceutical multinational corporations have been BCG's consistent clients in China because of the huge market potential, Stern revealed.

For foreign companies, along with distribution, branding has become one of the major issues for them in China.

"Branding is extremely expensive in China," said Wong. "The problem is Chinese consumers are being bombarded with new brands every few months, so brand loyalty is a problem."

Advertisement spending in China is also inefficient because multinational companies sell to high-income urban residents and not the whole 1.3 billion population, he concluded.


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